You’ve probably heard that the only certainty of life is death and tax. Alternatively, the shower in April brings May flowers. Another truth to add to that list is: Credit card balances do not rise in the first quarter of the year. This was once again the case in 2025. The balance fell to $1.18 trillion in the first quarter, down $29 billion (2.4%) from the fourth quarter of 2024. According to the New York Fed. Over the past 22 years, credit card balances have declined in the first quarter from Q4 in 21st Q4, and have been flat once (2023).
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Why credit card balances tend to fall in the first quarter
There are two main explanations for credit card balances, which tend to decline in the first three months of the year: tax refunds and post-holiday spending detox.
a 2024 Bank Rate Survey It has revealed that 19% of Americans hoping to get a tax refund plan to put most or all of their money into debt payoffs. this year, The Internal Revenue Agency says Approximately 142 million tax returns have been processed, of which approximately two-thirds have been refunded. The average amount is $2,947. It will put a great dent on your average credit card balance ($6,580, According to Transunion).
It also makes sense that many Americans spend less in January, February and March and have a cover on their credit card balances. In the first quarter, many are looking to recover from their holidays. The fourth quarter tends to bring about the biggest spike in credit card balances, following a more modest increase that usually occurs in the second and third quarters. Additionally, cold weather in most parts of the country will suppress some degree of economic activity during the first three months of the year. These phenomena unfolded again in the first quarter of 2025.
Still, credit card debt remains a major burden for millions of American households. Average credit card rate (20.12%) remained stubbornly high within the ear range of the highest ever recorded (20.79%) set last summer. If you make the lowest payments towards your average balance at the average rate, you will be liable for over 18 years and will be paying about $9,600 in interest. In other words, don’t jump at joy as the total burden of American credit card debt has dropped by a few percentage points over the past few months.
How to pay off credit card debt
The best course of action is to zero individual credit card rates if possible. It is important to note that the aforementioned New York Fed and Transunion figures do not distinguish between credit card bills paid in full each month and non-credit card bills. In other words, they focus on instantaneous balance (usually the voice of the cardholder tomorrow) rather than the true debt that takes place every month.
If you pay in full and avoid interest (what more than half of cardholders do normally; According to Bankrate’s 2025 Credit Card Debt Report), and then life is wonderful. You can make the most of your compensation, convenience and buyer protection without giving cents to your interest rates. For these reasons, an increase in credit card balances can be considered (at least in part) as a proxy for economic activity. Consumer spending strengthens the economy. Credit card balances are expected to grow over time as the population and economy grow. Also, the payment mix continues to move towards the card and away from the cash.
However, if you are in the other half of your cardholder (half of your debt), it is important to pay off your balance as quickly and cost-effectively as possible. First of all, don’t be embarrassed – you have a lot of companies. Credit card debt usually has practical causes: medical costs, car repairs, home repairs, daily expenses. But it’s probably your best cost liability, so it’s something you prioritize. This is the way.
Balance Transfer Card
Consider moving your high-cost credit card debt to a new card with generous 0% Balance Transfer Promotion. The longest offer in the market today is 24 months of US Bank Shield™ Visa® Card, with 0% interest on balance transfers and new purchases. The various APRs then range from 17.74% to 28.74%, depending on the creditworthiness of the cardholder. Also note the transfer fee (5% or $5, whichever is greater).
Remember the minimum payment scenario that includes average credit card balance and average interest rate? Well, instead of paying debt for over 18 years at a total cost of $16,000 (including principal and interest), you can knock out your average balance ($6,580) to avoid transfer fees and all interest thanks to a 24-month 0% balance transfer promotion to knock out your average balance ($6,580) in order to avoid transfer fees and all interest.
Non-profit credit counseling
A solid backup plan is non-profit credit counseling, especially if you have a low credit score (for example, 680) or if you have many credit card debt (over $6,000). Reputable institutions such as Money Management International and GreenPath offer debt management plans along a 6% interest rate route over five years. They charge nominal fees (for example, a $50 setup fee and a $25 per month fee) and help to repay debts that are much more cost-effective than that minimum payment scenario.
Increase your income and reduce your costs
Certainly not an option for anyone, but additional levers that can be pulled to increase income and reduce costs can accelerate your debt payoff strategy. For example, more than a third of US adults have side hustles, according to Bankrate’s 2024 Side Hustle Survey. Among them, they bring an average of $891 extra per month. If you direct all these funds to your average credit card balance, you can pay it off in just 7 months.
We also recommend taking a quick look at your spending to find a place to cut. You don’t have to do this forever, but living more modest for six months or a year can make a huge difference to your financial situation. Cancel small subscriptions and discover cheaper entertainment options to eat out frequently, and more.
Conclusion
The first quarter of 2025 saw American credit card balances slightly soaked, but these balances are astounding as 54% from four years ago. Credit card debt represents the highest debt for millions of US households. Take strategies like balance transfer cards, 0% intro APR cards, non-profit credit counseling, tackling credit card debt and making your credit card work rather than other methods.
Information about US Bank Shield™ Visa® cards is collected independently by Bankrate.com. Card details have not been reviewed or approved by the card issuer.
